Question: answer choices Assume that the current interest rate on a 1-year Treasury bond (1R1) is 6.5 percent, the current rate on a 2 -year Treasury

answer choices Assume that the current interest rate on a 1-year

answer choices

Treasury bond (1R1) is 6.5 percent, the current rate on a 2

Assume that the current interest rate on a 1-year Treasury bond (1R1) is 6.5 percent, the current rate on a 2 -year Treasury bond (1R2) is 7.25 percent, the current 3-year Treasury bond (1R3) is 8.5 percent, and the current 4 year Treasury bond (1R4) is 10.5 percent. If the unblased expectation theory of the test structure of Interest rates is correct, what is the 1 -year forward rate expected in Treasury bills during year 4,4f1) ? 15.02% 1266% 13.80% 16.72%

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